Steve Pope wrote:
> George > wrote:
>
>> Steve Pope wrote:
>
>>> George > wrote:
>
>>>> I have a family member who got kicked in the face just before he
>>>> retired. [..]
>
>>> This kind of behavior is one of the reasons to get rid of
>>> defined benefit plans (which can be underfunded), as well as
>>> any health-care benefits that are unfunded/underfunded.
>
>> Why?, just give it to a trustee as before.
>
> To my way of thinking, if it's a defined contribution plan,
> then you get what was put into it, plus (or minus) the
> investment results. There is no real chance of default,
> short of outright theft where someone absconds with the
> funds. But if it's a defined benefit plan,
> you maybe get what you're promised, but maybe not, so the odds
> of a dispute (or a taxpayer liability) are a lot higher.

Actually it was really simple. If you were an employer and you had a
pension plan you were required to give the money (it wasn't yours
anyway) to a trustee. That was clean and simple, you could disappear but
the money was still there. Then employers made the proper arrangements
with congress to dilute that requirement so that they could keep money
that wasn't theirs.


>
>>> The taxpayers through the PBGA ("some government agency") guarantee
>>> such pensions up to about $45K/year if the plan goes bust. Perhaps
>>> your family member was expecting a roughly $100K/year pension benefit
>>> and only got 43% of that from the taxpayers. Their expectation was
>
>> It was a lot less than that and about 5 years ago. I don't know the
>> exact details.
>
> The supposed guarantee is (in 2008) up to about $51K/year,
> if one retired age 65, but would be smaller if one retired
> at a younger age, and it was some smaller amount five years
> ago.
>
> If have not heard of settlements of the form "everyone gets a
> percentage" but I imagine anything's possible.
>
>> I love the way you phrase it like it was his fault. His
>> expectation was that according to his employment contract he
>> was to get a certain amount as a pension from his employer.
>
> I don't think it's his fault, but it's certainly not the
> taxpayer's fault,

But congress who is the representative of the taxpayers approved the
change of a solid plan allowing the companies to keep money that wasn't
theirs I am sure after the appropriate envelopes were passed and
guarantees of do nothing $1 Million advisory board seats etc were made.
How do we get rid of corrupt politicians and make them pay?


and with the taxpayers making good on some
> of the defaulted pension in my view he comes out ahead
> and the taxpayers (many of whom are struggling to finance
> their own retirements) lose.
>
> Why do employees accept a promise of a pension from an
> employer anyway, rather than cash up front? There are
> two reasons -- the tax advantages of pension plans, and
> the fact that they're not given the choice of equivalent cash,
> by virtue of the fact that the defined benefit pensions,
> while promised, were almost always underfunded. Which
> means that the employer/employees never generated enough
> value to fund the plan in the first place, which means that if
> the taxpayers come in and pay anything (even a fraction) it's
> IMO a sweet deal for the recipient and a bad deal for the taxpayers.

Actually the plan my family member was in was properly funded until
congress allowed companies to use the pension money according to the
mandatory reporting that had to made by the trustee.

>
> Steve